Existing 2G customers are reluctant to switch to smartphones because of high device prices and a preference for feature phones, executives said. For users from the lowest economic strata, the tariffs would be high, even though they are among the lowest in the world in India.

“There are about 150-200 million existing 2G customers, of which about 50-100 million may be forced to move to 4G, but there will be a large customer base that will not move to 4G and that is true no only in our case. network, but also on any other network,” said a senior executive at Reliance Jio, India’s largest telecom service provider, which is banking on India not being 2G. The operator provides ₹1,000 JioBharat phones to first attract such users and then move them to 4G.

“They are customers who can’t move ₹1,000 devices, because it’s unaffordable for them,” said the executive, who asked not to be named. “Unless the telcos themselves decide to shut down 2G or the government forces it, India’s 2G networks will continue to operate.”

While Reliance Jio does not have 2G customers on its network as it only provides 4G and 5G services, it has proposed using ₹75,000 crore Universal Service Obligation Fund – created to ensure that connectivity reaches all under-connected areas of India – by subsidizing smartphones for feature phone users.

Vodafone Idea, which has about 86 million 2G users accounting for 40% of its user base, said it will urge its customers to switch to 4G but will not abandon them or allow them to be let down by the competition. Vi’s Chief Marketing Officer Avneesh Khosla said Mint that the rate increases were accepted by consumers, but the high prices of entry-level 4G smartphones, which have risen significantly over the past two years, continued to pose a challenge.

“Even the OEMs (original equipment manufacturers) have started to leave that price point because everyone wants to move up the value chain. There will be a proportion of customers who will continue to be on 2G devices and we continue to convince them, but if they want to be served with a 2G device and a 2G network, are we going to give that up? The answer is no,” Khosla said.

Vi will shut down its 3G services by March next year, becoming the last player to shut down 3G services and only have 2G, 4G and 5G networks in the country.

Bharti Airtel, India’s second largest operator, which has about 90 million 2G customers, also said it would not shut down its 2G network as it continues to serve customers at the lower end and does not have to spend for this, as it does not require additional spectrum.

2G customers typically have low average revenue per user users who do not have access to the high-speed internet offered by 4G or 5G.

“Lack of affordable entry-level smartphones, higher costs associated with 4G plans and limited 4G network coverage in remote areas are key reasons why 2G users are not migrating to 4G,” said Shilpi Jain, senior analyst at Counterpoint Research. India still has a significant featurephone user base for the 2G network and a section of users keep featurephones as a secondary device, she said.

Many senior citizens prefer a basic feature phone over a smartphone that ensures continuity of 2G networks in India. Also, because there is still a significant gap between the price of feature phones and entry-level smartphones, the migration has slowed in recent years, she said. The price of entry-level 4G devices starts from ₹6,000, while 5G phones start at ₹9,500 onwards.

However, Faizal Kawoosa, founder of research firm TechArc, expects 2G users to ditch private networks altogether if rate hikes continue.

“While telcos are constantly working to improve ARPU, mainly through rate hikes, they want to phase out this high-volume, low-value subscriber tier. Maybe that’s why they’re working on a plan to let such subscribers go and make money from the pay base and keep gradually increasing the rate to compensate,” Kawoosa said. “Eventually, we could just be left with state operator BSNL with a 2G Network to which all such subscribers will be connected.”

BSNL added customers at the expense of rivals. In August, BSNL gained 2.5 million customers, taking its total to 91 million, according to data released by the Telecom Regulatory Authority of India on Friday. However, Jio lost 4 million while 2.4 million left Airtel and 1.8 million subscribers left Vi.